Corporate sustainability

Corporate sustainability is an approach that creates long-term stakeholder value by implementing a business strategy that includes taking into consideration every dimension of how a business operates in the social, environmental, cultural, and economic environment. It also formulates strategies to build a company that fosters longevity through transparency and proper employee development.

Corporate sustainability is an evolution on more traditional phrases describing ethical corporate practice. Phrases such as corporate social responsibility (CSR) or corporate citizenship continue to be used but are increasingly superseded by the broader term corporate sustainability. Unlike phrases that focus on "added-on" policies, corporate sustainability describes business practices built around social and environmental considerations.

The phrase is derived from two keys sources. The Brundtland Commission's Report, Our Common Future, described sustainable development as, "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". This desire to grow without damaging future generations' prospects is becoming more and more central to business philosophies. Within more academic management circles, Elkington (1997) developed the concept of the Triple Bottom Line which proposed that business goals were inseparable from the societies and environments within which they operate. Whilst short-term economic gain could be chased, a failure to account for social and environmental impacts would make those business practices unsustainable.

Measuring corporate sustainability is possible through composite indicators which aggregate environmental, social, corporate governance and economic measures, e.g. Complex Performance Indicator (CPI).

The challenge for many businesses in this new field is to quantify the positive impacts of sustainability. Sustainability can increase revenue, reduce energy expenses, reduce waste expenses, reduce materials and water expenses, increase employee productivity, reduce hiring and attrition expenses, and reduce strategic and operational risks. Furthermore, sustainable business practices may attract talent and generate tax breaks.

Transparency deals with the idea that by having an engaging and open environment in the company as well as the community will improve performance and increase profits. It is an open culture that promotes employee involvement in the innovation and creative processes. Reaching out to the community creates a much bigger team is extremely cheap and provides evaluation from all angles. Companies are looking inward and realizing changes must be made to fulfill environment needs such as energy efficiency, limiting product waste and toxicity, and designing innovative products. One way for companies to accomplish this is through open communications with stakeholders characterized by high levels of information disclosure, clarity, and accuracy.

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